Pin button issued by "The Knights and Ladies of Security" of Topeka, Kansas

A benefit society, fraternal benefit society or fraternal benefit order is a society, an organization or a voluntary association formed to provide mutual aid, benefit, for instance insurance for relief from sundry difficulties. Such organizations may be formally organized with charters and established customs, or may arise ad hoc to meet unique needs of a particular time and place. Many major financial institutions existing today, particularly some insurance companies, mutual savings banks, and credit unions, trace their origins back to benefit societies, as can many modern fraternal organizations and fraternal orders which are now viewed as being primarily social; the modern legal system essentially requires all such organizations of appreciable size to incorporate as one of these forms or another to continue to exist on an ongoing basis.

Benefit societies may be organized around a shared ethnic background, religion, occupation, geographical region or other basis. Benefits may include financial security and/or assistance for education, unemployment, birth of a baby, sickness and medical expenses, retirement and funerals. Often benefit societies provide a social or educational framework for members and their families to support each other and contribute to the wider community.

Philadelphia's first black organization, the Free African Society was established in 1787 by two African American former slaves, Absalom Jones and Richard Allen. These two men were Methodist converts from evangelical masters, who gave these men permission to purchase their freedom in the early 1780s.[1]

Mutual aid was a foundation of social welfare in the United States until the early 20th Century. Early societies not only shared material resources, but often advanced social values related to self-reliance and moral character. Many fraternal organizations were first organized as mutual aid societies when government at the state and local level supplemented private aid societies more than the converse of this being true. In 1890, 112,000 American residents lived in private charitable institutions, while only 73,000 resided in public almshouses. Towards the latter part of the nineteenth century, public aid was reduced as it was seen as contributing to sloth and dependency while private aid was judiciously provided with greater checks for reform and recovery.[2] Writing in 1890, Jacob Riis, commenting on the extent of private charity, says: "New York is, I firmly believe, the most charitable city in the world. Nowhere is there so eager a readiness to help ..."[3]

Medieval guilds were an early basis for many Western benefit societies. A guild charter document from 1200 states:

"To become a gildsman,..it was necessary to pay certain initiation fees,..(and to take) an oath of fealty to the fraternity, swearing to observe its laws, to uphold its privileges, not to divulge its counsels, to obey its officers, and not to aid any non-gildsman under cover of the newly-acquired 'freedom.'" (C Gross, The Gild Merchant, (1927))

This charter shows the importance of 'brotherhood', and the principles of discipline, conviviality and benevolence. The structure of fraternity in the guild forms the basis for orders such as Freemasonry and other fraternal orders, friendly societies and modern trade unions. Joining such an organisation a member gained the 'freedom' of the craft, and the exclusive benefits that the organisation could confer on members.

Historically, benefit societies have emphasised the importance of social discipline, in conforming to the rules of the organisation and society, and acting in a morally uplifting and ethical manner. Conviviality and benevolence are important principles. Fraternal societies differed from public and private hierarchical aid organizations by employing an "ethical principle of reciprocity."[4] This removed the stigma of charity.

During the eighteenth and nineteenth centuries benefit societies in the form of friendly societies and trade unions were essential in providing social assistance for sickness and unemployment, and improving social conditions for a large part of the working population. With the introduction in the early twentieth century of state social welfare programs, and industrial, health and welfare regulation, the influence and membership of benefit societies have declined in importance, but remains significant. Nevertheless, in many countries, for example in Europe, mutual benefit societies continue to provide statutory and supplementary healthcare coverage.

Oaths, secret signs and knowledge, and regalia were historically an important part of many benefit societies, but declined in use in most benefit societies during the late nineteenth and early twentieth centuries. Conversely, signs and ceremony have become the mainstay of fraternal societies that no longer focus as much on mutual aid.

Many of the features of benefit organizations today have been assimilated into organizations that rely on the corporate and political structures of our time. Insurance companies, religious charities, credit unions and democratic governments now perform many of the same functions that were once the purview of ethnically- or culturally-affiliated mutual benefit associations.

New technologies have provided yet more new opportunities for humanity to support itself through mutual aid. Recent authors have described the networked affiliations that produce collaborative projects.[citation needed] In modern Asia rotating credit associations organized within communities or workplaces were widespread through the early twentieth century and continue in our time.[5]Habitat for Humanity in the United States is a leading example of shared credit and labor pooled to help low-income people afford adequate housing.

Benefit societies, fraternal benefit societies or "fraternals" are not for profit membership organizations that have a representative form of government and are organized through a lodge system, commonly represented in the societies of North America.[6] to carry out social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic or religious purposes. "Fraternals" provide members with life insurance and other financial protection benefits in accordance with state law and use the earnings to fund member-supported community activities. Fraternals are chartered by state law and have been exempt from income tax under Section 501(c)(8)[7] of the United States Tax Code since 1909.

Fraternal Benefit Societies trace their lineage back through mutual benefit societies, friendly societies and eventually to medieval guilds.[8] Many fraternal benefit societies were founded to serve the needs of immigrants and other under-served groups[9] who shared common bonds of religion, ethnicity, gender, occupation or shared values. The first modern American fraternal benefit society was the Ancient Order of United Workmen, founded by John J. Upchurch in 1868.[10] "The Order of Knights of Pythias is a great international fraternity which was founded in Washington, DC, February 19, 1864, by Justus H. Rathbone..."[11] The Knights had an "Endowment Rank" which included life, health and disability insurance.

“the American fraternal system had its beginning as a result of the fraternal desire of men to cooperate for their mutual welfare and happiness, and that the benefit plan they introduced followed an innate prompting to protect their dependents.”

The Model Fraternal Code which has been adopted in some form by most states defines fraternals as follows:[13]

Section 1. FRATERNAL BENEFIT SOCIETIES. Any incorporated society, order or supreme lodge, without capital stock, including one exempted under the provisions of Section 38(a)(2) of this Article whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and which provides benefits in accordance with this Article, is hereby declared to be a fraternal benefit society.

The court's opinion in National Union v. Marlow[14] is considered to be the leading judicial pronouncement of what constitutes a fraternal society.[15]

National Union v. Marlow 374 F. 775, 778 (1896)

A fraternal-beneficial society would be one whose members have adopted the same, or a very similar calling, avocation, or profession, or who are working in union to accomplish some worthy object, and who for that reason have banded themselves together as an association or society to aid and assist one another, and to promote the common cause. The term "fraternal" can properly be applied to such an association, for the reason that the pursuit of a common object, calling, or profession usually has a tendency to create a brotherly feeling among those who are thus engaged. *** Many of these associations make a practice of assisting their sick and disabled members, and of extending substantial aid to the families of deceased members. Their work is at the same time of a beneficial and fraternal character, because they aim to improve the condition of a class of persons who are engaged in a common pursuit, and to unite them by a stronger bond of sympathy and interest.

As indicated in this case, a fraternal benefit society is required to have a "common bond" among its members.[14] Further, a society is required to specify in its laws the eligibility standards for membership, as well as classes of membership, the process of admission, and the rights and privileges of members.[16]

A fraternal benefit society is operating under a lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated or admitted in accordance with its laws.[17] A society has a representative form of government if its supreme governing body is an assembly composed of delegates elected directly by members or intermediate assemblies, or a board similarly elected.[18]

Fraternal benefit societies provide insurance benefits to their members including life insurance and endowments, annuities, disability, hospital, medical and nursing benefits, and such other benefits authorized for life insurers that are not inconsistent with the general fraternal laws.[19]

More than a century after their creation, fraternal benefit societies remain an active part of the U.S. economy. The charitable and volunteer efforts of lodge members significantly impact local communities.[12] There are more than 80 fraternals operating in the United States and Canada today, serving over 9 million members[20] with $380 billion of life insurance in force. In all the nation’s 70 fraternal benefit societies combined, the U.S. government sees a benefit of $3.4 billion in charitable contributions and social capital annually, according to a 2010 Georgetown University study.[20]

In 2011, members of fraternal benefit societies contributed more than 84 million volunteer hours of service and $380 million to their communities, such as charities and people in need.[21]